Rarely do I hear as loud and sustained drumbeat of complaint as I have from many of our members concerning recent legislative tax changes. The sounds are coming from all sectors and sizes of business. Here is what I think galls people the most.

For as long as folks can remember, there was a dynamic tension between the tax habits of government and those who actually create wealth that is taxed—or those who simply have accumulated it. Government has increased tax burdens proportional to its need to support critical programs, but never overreached into areas that would fundamentally place Vermont businesses at a competitive disadvantage. This year we seemed to have reached the tipping point. The tax package adopted by the Vermont legislature this past session took aim at three areas that further eroded Vermont’s business development competitiveness, upset the retirement planning of many average citizens, and removed one deduction that raised a small amount of money while removing a tax break that most middle class wage earners could access.

• Capital Gains: far from the “loophole” that both the legislature and administration attempted to portray it as, the Vermont exemption was one tool that supported entrepreneurship and small business development. In a sense, it penalizes folks for starting a successful business, spinning it off, and investing in another start up. Add to that the fact that Vermonters who had been nesting their retirement in land acquired many years ago will now experience a significant reduction in their realized savings, and this new tax had the effect of disproportionately hitting the young that we want to encourage to stay here and the older folks to whom we should be demonstrating sensitivity.
• Estate Tax: the tax, while a nice political football, actually hurts the preservation of small family businesses, including the traditional Vermont family farm.
• Vermont Income Tax Deduction: There aren’t many tax deductions that are available to taxpayers of moderate means. The ability to deduct your state tax payment was one of them. At a time when citizens of moderate means are struggling to pinch pennies, taking this off the table just makes no sense.

There are probably more significant issues that create the din of noise coming from our membership but these are three that fall into the ‘no brainer’ category. So, in the hopes of restoring any competitive advantage we might have and to help the struggling middle class, why not Repeal them. At a minimum, let’s have the newly formed state Blue Ribbon Tax Structure Committee review the real effects of these three new taxes.

By the way, what’s your view? Please let me know. You can post your response to this blog free of charge simply by entering a user name.